A Roth IRA is an individual retirement account that offers tax-free growth and tax-free withdrawals in retirement. Unlike traditional IRAs, contributions to a Roth IRA are made with after-tax dollars, meaning there are no current-year tax benefits. However, contributions and earnings can grow tax-free, and withdrawals are tax-free and penalty-free after age 59½ and once the account has been open for five years.

Some key features of a Roth IRA include:

• No contribution age restrictions: Unlike traditional IRAs, there are no age restrictions on contributions to a Roth IRA.
• No required minimum distributions (RMDs): Roth IRAs are not subject to RMD rules during the lifetime of the account owner.
• Income limitations: There are income limitations to opening a Roth IRA account. For example, if you file as a single person and your Modified Adjusted Gross Income (MAGI) is above $153,000 for tax year 2023, or if you file jointly and your MAGI is above $228,000 for tax year 2023, you may not be eligible to open a Roth IRA.

Roth IRAs can be a good savings option for those who expect to be in a higher tax bracket in the future, making tax-free withdrawals even more advantageous. However, there are income limitations to opening a Roth IRA, so not everyone will be eligible for this type of retirement account.